Facebook Inc.'s computer-security team faced a quandary after getting an unexpected tip in May.

An outside researcher unearthed a weakness in the company's network that left internal communications vulnerable to eavesdropping. Facebook engineers quickly fixed the bug.

Then came a bigger dilemma: whether to reward the tipster, who by using information for good is known in hacking circles as a "white hat." The team made an unheard-of choice. Facebook would offer a bounty to anyone who finds a hole in its corporate network and then opts to report -- and not exploit -- it.

"If there's a million-dollar bug, we will pay it out," said Ryan McGeehan, who manages Facebook's security-incident response unit.

Facebook is becoming the first big technology provider to reward hackers who uncover vulnerabilities on its own corporate network -- a risky proposition considering that's where the company stores data on its more than 900 million users. Facebook, based in Menlo Park, California, plans to announce the broadened program this week at the DefCon Hacking Conference in Las Vegas.

Facebook was already one the few large companies, besides Google Inc., that pays a "bug bounty," or cash reward, to outside hackers who report weaknesses in its products -- say, e- mail or profile pages. Many companies shun the practice, saying it provides incentives for possibly nefarious deeds.

Bug bounties are a way for companies to make products more secure while engaging with hackers, many of whom would be looking for the vulnerabilities anyway -- whether for fun or research or to sell into a thriving black market.

Facebook risks

Facebook, which later today is scheduled to report second- quarter results, has an added incentive to try new ways to protect itself: as the owner of the world's largest social network, it's responsible for one of the richest repositories of personal data. A large breach could damage faith in its ability to serve as custodian for private information.

More than 563 million records have been compromised in about 3,200 data breaches since 2005, according to the Privacy Rights Clearinghouse, a sign that security breakdowns in a few key places can do harm on a much wider scale.

As part of its existing program, Facebook has paid $500 to $10,000 per bug, and researchers have claimed about $400,000 in total rewards, said Fred Wolens, a spokesman for Facebook. The company has created added allure by distributing the payments on Visa Inc.-branded debit cards that look like American Express Co.'s invitation-only Centurion cards.

Paying up

Facebook says there's no limit to what it will pay to catch weaknesses in internal networks.

Google has paid more than $1 million through its programs, including payments as high as $60,000 for bugs in the Chrome browser, according to Chris Gaither, a Google spokesman. Mozilla Corp., which makes the Firefox Web browser, had paid more than $600,000 through its program, said spokeswoman Gretchen Bender. And the Zero Day Initiative, which collects vulnerabilities on multiple vendors' products, has paid more than $5.6 million since 2005, said Scott Lambert, director of Hewlett-Packard Co.'s DVLabs, which runs the Zero Day Initiative.

Facebook's proposition comes as the newly public company grapples with concerns over user-data protection and its ability to boost sales growth.

Until now, Google and Facebook's bounties have prohibited the submission of network vulnerabilities. Google said that the company has no plans to expand its program to the corporate network.

Hacker sensibility

While Mozilla doesn't specifically exclude attacks on its network, it also doesn't actively encourage them. The Zero Day Initiative has paid for a range of vulnerabilities -- though it focuses on applications, not entire networks.

Facebook's decision to expand grew out of the success of the bounty program for products, said Joe Sullivan, Facebook's chief security officer. The company's hacker culture, promulgated by Chief Executive Officer Mark Zuckerberg, helped the idea win broad support internally, he said.

The hacker ethic has deep roots in Facebook's history. Zuckerberg invoked the idea in his letter to investors before the company's initial public offering, describing Facebook's culture as centered around the "Hacker Way."

"Hackers believe that something can always be better, and that nothing is ever complete," Zuckerberg wrote in the letter. "They just have to go fix it -- often in the face of people who say it's impossible or are content with the status quo."

"˜Poking' risk

There are risks for Facebook painting a bull's-eye on its network. Hackers who otherwise wouldn't have considered it will likely begin probing the network, and service could be disrupted. By the same token, corporate networks are attacked constantly anyway, so engaging outsiders who are willing to report bugs instead of selling them to criminals is wise, said Tom Cross, director of security research at Lancope Inc.

"It's a positive step, and it's a bold step," he said. "It puts researchers in a position where they're a little more comfortable, knowing that the organization anticipates receiving these kinds of disclosures and is not going to turn around and accuse them of doing something wrong. But on the other hand, it opens up the prospect that people are going to think they're authorized to go poking at the network and poking at the site, and if they knock something over, so be it."